Reliance Industries (RIL) reported standalone revenue/EBITDA of Rs 613 / 87 bn, -29/-33% YoY and +9/+14% QoQ (4/17% lower than estimates). Standalone APAT stood at Rs 87 bn, -9/+34% YoY/QoQ (HDFC estimate: Rs 64 bn). The company has provided for impairment in its investment in Shale Gas subsidiaries to the extent of Rs 1.2 bn. The company has also recognised Deferred Tax Assets of Rs 156 bn in respect of the difference between the book base and tax base of the Shale Gas operations. This has resulted in a lower tax outgo for Q3.
HDFC Securities ADD rating on Reliance Industries with a price target of Rs 2330 /sh is premised on:
(1) induction of Facebook, Google, Intel and Qualcomm as partners in Jio Platforms, which should help the company accelerate the growth of digital connectivity and create value in the digital ecosystem through technology offerings
(2) recovery in refining and petrochem businesses in FY22E
(3) the emergence of a clear path to a stronger balance sheet
(4) stake sale in the retail business.
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Reliance Industries standalone Oil to Chemicals (O2C) segment: Revenue grew 11% QoQ to INR 708 bn, primarily on account of higher volumes, mainly in transportation fuels, PTA and Polyester supported by improved product realisation across Polymers, Intermediates and Polyester. Reliance Industries EBITDA for Q3, improved by 9% QoQ to Rs 92 bn primarily on account of higher product sales and shifting of product placement from exports to domestic market. Crude throughput declined 4% YoY and grew 9% QoQ to 16.7mmt. During the quarter, Polymers margins were at a record high, while intermediate margins were sequentially better. Reliance Industries Cracker operating rate was 96%, impacted by scheduled shutdown of ROGC at Jamnagar.
Reliance Jio: Revenue grew by 5% QoQ to Rs 195 bn. ARPU rose to INR 151 (+18/4% YoY/QoQ) while the gross/net subscriber addition was 25/5 mn. During the quarter, Google invested an amount of Rs 337bn into JPL (Jio Platform Limited) for a 7.73% stake. This has resulted in a total investment of Rs 1521 bn by the investors for a stake of 32.88% in JPL.
Reliance Retail (RR): Reliance Retail’s net revenue declined 18.8% YoY to INR 378.5bn. Core operations (ex-F&L) disappointed. While there have been a few restructuring/re-purposing of segments such as (1) Reliance Market transitioning into fulfillment centers, and (2) Petro Retailing being transferred to RMBL (The RIL-BP JV). Adj. performance in grocery and CE remained weak too. The F & L segment rebounded strongly and doubled QoQ. Adj EBITDAM (ex-INR 7.75bn investment income) came in at 7%.
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